Centre to crack down on delays in crop insurance claim payouts

To fix accountability, the government now proposes to slap 12 per cent interest on delayed crop insurance claim payouts under the Pradhan Mantri Fasal Bima Yojana (PMFBY).

Aware that there are challenges when implementing such schemes on a mammoth scale while maintaining transparency, Agriculture Minister, Radha Mohan Singh, told BusinessLine that “we want to ensure that the affected farmers are compensated in time.”

For the purpose, he said, “We are considering a proposal to levy 12 per cent interest on claim payments that are not settled within two months. Whoever is responsible for the delay — be it the crop insurance firm or the State government — may have to bear this interest,” Singh said. He, however, did not elaborate when the measure would roll out formally.

The PMFBY guidelines stipulate the settlement of claims within two months of harvest and within 21 days of receipt of yield data by the companies from the State governments.

According to Singh, there have been many teething issues relating to PMFBY implementation for all stakeholders, particularly for State governments, as the scheme was launched just two years ago.

Acknowledging that there has been a drop (14 per cent) in the area covered under PMFBY in 2017-18, he said: “This was mainly due to our attempts to bring in some transparency in the scheme by adopting technology. In the early days of PMFBY, as the scheme was heavily subsidised, the area covered in many places was more than what should actually be covered.” According to government data, the percentage of total cropped area covered was 29 per cent in 2016-17, it came down to 25 per cent in 2017-18. “Say, for instance, a village had 200 hectares under notified crops, and thus was eligible for insurance cover, the area covered used to be more than 200 hectares. But, the increasing adoption of technology is making such frauds difficult,” said Singh.

While only 10 lakh non-loanee farmers enrolled for PMFBY during the last kharif season, the number has gone up seven times to 70 lakh farmers, according to the latest estimates, the Minister said.